Are you planning to leave a significant inheritance to some of your beneficiaries? Are you worried that they may simply receive the money and then step away from their careers?
This is a common concern for high-asset individuals who are making an estate plan. For instance, perhaps you are planning on creating a trust that will pay one of your adult children over $100,000 a year. You know that they could simply stop working and live off of the money if they wanted to do that. You do not want their inheritance to take away their motivation to be successful. What should you do?
Using an incentive trust
Some wealthy individuals will take drastic steps, such as cutting their children out of the estate plan. But you do not necessarily have to disinherit them to ensure that they are not just going to live off of your wealth.
A better option could be putting the money into an incentive trust. You can then set up stipulations for when it should be released, and it could be connected to the beneficiary’s employment.
For instance, you could leave instructions for the trustee saying that the beneficiary should receive their $100,000 allotment annually, but they should only receive it if they are still gainfully employed. This way, the trust dramatically increases their standard of living, but they cannot just quit their job or their access to that money would be cut off. This incentivizes them to prioritize their career, while still leaving them a substantial and potentially life-changing inheritance.
This is just one way to use a trust to accomplish your goals in your estate plan. Take the time to carefully look into all of your legal options while drafting that plan.